§ 1965.25 - Release of FmHA or its successor agency under Public Law 103-354 mortgage without monetary consideration in certain cases.

(a) Additional real estate security owned by an entity member(s). Real estate owned by a member(s) of an entity-borrower, which was taken as additional security for a loan secured by real estate, may be released if it is needed for the entity member(s) to finance a separate operation and the remaining real estate adequately secures the entity loan(s). A release will not be considered if a subordination can be approved for the same purpose. The County Supervisor will document in the case file why a subordination is not feasible.

(b) Release of real estate from mortgage because of mutual mistake. Land or buildings included in the mortgage through mutual mistake, when substantiated by the facts of the situation, may be released from the mortgage by the State Director. The release is contingent on a determination of the State Director, with the advice of the OGC, that a mutual error existed at the time such property was included in the Government's mortgage.

(c) No evidence of indebtedness. The FmHA or its successor agency under Public Law 103-354 mortgage may be released by the County Supervisor in situations where there is no evidence of an existing indebtedness secured by the mortgage in the records of the FmHA or its successor agency under Public Law 103-354 County, State, and Finance Offices.

(d) Release of valueless liens. State Directors are authorized to release FmHA or its successor agency under Public Law 103-354 mortgages or other liens when the mortgages or liens have no present or prospective value or when their enforcement would likely be ineffectual or uneconomical. This includes release of a junior lien on the borrower's dwelling financed with an SFH loan and located on a nonfarm tract when the junior lien was taken as additional security for a Farmer Program loan(s). This authority does not extend to valueless judgment liens or valueless statutory redemption rights except with the consent of the OGC. The following information will be obtained in determining present or prospective value:

(1) Appraisal report. A market value appraisal report on the security prepared by an FmHA or its successor agency under Public Law 103-354 employee authorized to appraise under § 761.7 of this title.

(2) Lienholders. The names of the holders of prior liens on the property, the amount secured by each lien which is prior to the FmHA or its successor agency under Public Law 103-354, the amount of taxes or assessments, and other items which might constitute a prior claim. This information will be recorded in the running case record of the borrower's County Office case folder and submitted to the State Director for review.